Bellevue Life Sciences (NASDAQ:BLAC) has entered into a definitive agreement to combine with Korean healthcare holding company OSR for undisclosed compensation.

Seoul-based OSR is a conglomerate of several biotech firms advancing drug candidates as well as a medical device distributor.

Transaction Overview

Bellevue has about $36.4 million in its current trust having seen 49.7% redeemed in an extension vote earlier this month that granted it the ability to extend up to May 14, 2024.

The parties have not yet disclosed the exact share counts contemplated in the deal, but Bellevue expects to own at least 60% of the combined entity with the right to acquire the remaining shares on or after January 1, 2025 or 2026 in a change of control of the SPAC.

Bellevue must maintain more than $5 million in cash in order for the deal to close.

Quick Takes: The parties have thus far released scant details on the structure of this deal, but to a certain extent some of those particulars may be irrelevant as this is another in a series of SPAC deals involving a sponsor entity essentially merging with itself.

Bellevue and OSR share a CEO in the form Peter Kuk Hyoun Hwang, who also serves as the founder and managing partner of Bellevue Capital Management, the investment group that backs them both.

Although Bellevue did not lay out in its SPAC S-1 that its plan was essentially to take its own business public, the filing did lay out the structure of how it operates and explained the SPAC’s strategy as being one and the same as its sponsoring entity’s.

With Bellevue Capital’s support, OSR has acquired three operating subsidiaries in Switzerland and South Korea, two of which are focused on developing therapeutic drugs in the areas of oncology and osteoarthritis, and the third is a distributor of medical devices for the treatment of neurovascular and other diseases.

The company also signed a separate LOI on July 7 to acquire Landmark BioVentures AG, a Swiss company that operates through four different biotech ventures in France with therapeutic focuses on oncology and immunology.

Vaximm, its Swiss drug developing branch, is working to develop T-cell immunotherapies for cancer and was originally spun off of Merck (NYSE:MRK). Its VXM01 candidate has gained orphan drug designation in both the EU and US for treating glioblastoma and has completed Phase I/II trials.

It is now advancing four more candidates at a preclinical stage, while its Korean sister subsidiary Darnatein is developing an osteoarthritis drug. Its two candidates, DaRT101 and DaRT102 are design-augmented biologic therapies aimed at using proteins and RNA molecules to treat spine and joint disorders.

Providing a bit of vertical integration to the group, OSR’s RMC subsidiary distributes medical devices from clients including Penumbra, Asahi-Intec, Microport, and Zylox-Tonbridge. Presumably, its network could also be used to synergize the commercialization of OSR’s portfolio of drugs once they are approved.

The parties’ materials have not yet fully described how Landmark BioVentures fits into its overall strategy, but it appears unlikely that the move is unrelated to this transaction. The two sides signed their LOI four days before the LOI between the SPAC and OSR were announced.

Landmark is less of an internal drug developer than an accelerator of other biotech ventures and Bellevue could see incorporating its organization as a step to speeding up its own portfolio expansion.

Landmark’s own portfolio includes four biotech firms at the moment – ROCA, Elikya, Kekkan Biolgics and Carla Biotherapeutics.

Nice, France-based ROCA is at the investigational new drug (IND) application-stage with its RCT001 candidate, which it believes could treat a variety of vascular diseases and aims to study its effectiveness against metastatic uveal melanomas. Elikya is at the incubator-stage from its base in Strasbourg, France and the other ventures appear to be even earlier in their development.

The question with all of these insider SPAC deals is whether or not their public shareholders are going to be bought in for a deal struck between essentially different members of the same team? And, if not, can the combined entity survive without the support of the SPAC’s trust capital?

So far, that question has been partially answered by the SPAC only losing about half of its trust in its extension vote, which came four months after it announced the LOI with its affiliate.

Bellevue’s trust was already overfunded at $10.175 per share at IPO and has since grown to $10.51 as of this month’s vote. But, shareholders won’t gain too much more by sticking around as the sponsor has pledged to contribute only the lesser of $60,000 or $0.026 for each month it extends its deadline beyond February 14.

IPO investors also already have in hand a full warrant and a 1 for 1/10 right from the SPAC’s units, so time will tell how much Bellevue Capital will need to proactively support this next stage in its strategy for OSR.